James Nicholson, author. − Mr President, can I congratulate Mr Bové on his report on the farm input supply chain. It raises some very topical issues. We are all well aware that the rising cost of inputs – most notably for feed, fuel and fertiliser – is putting major pressure on farmers and continues to squeeze their margins in an economic climate that is already difficult, especially for the intensive sectors.

Specifically, the cost of feed has to be addressed; rising costs will force us to rethink our attitude, I believe, about soya imports from third countries and the problems associated with the protein deficit in the EU. I do not believe that domestic protein production can satisfy demand, especially if we wish to increase food production for reasons of food security. Moreover, rising food costs do not seem to result in higher farmgate prices and this has to be looked at for the benefit of both the consumer and the farmer. Large retailers must be prepared to cooperate with producers in order to ensure that the distribution of profits along the chain is equal and fair.

The EU imposes the strictest standards on animal welfare, environmental practices and food safety. I support the fact that the EU is the world leader in this regard, but I also think we have to find a balance between maintaining the highest standards and risking over-legislating our farmers out of business.

I fear the proposals from the Commission regarding the reform of the CAP go in that direction, especially in relation to greening and direct payments and the ridiculous set-aside proposal. With regard to the issue of imbalances in the food chain, it is clear that the power of retailers has grown to what some consider to be an unacceptable level. While there are some measures the EU can take, especially as regards transparency and profits in the chain, I think that farmers need to look at how they can organise themselves better and increase their bargaining power, whether through producer organisations or cooperatives.

Mairead McGuinness, on behalf of the PPE Group. – Madam President, oh to be a Commissioner and be able to have so much time to speak! It was good to hear your fulsome response, Commissioner. I have less time but I will be quite blunt. I would like you to take the comments in this debate as armour and weapons into your struggles on this matter. This House is united about one issue, which is that there is a problem at both ends – and, indeed, in the centre – of the food supply chain. The Bové report, which was an initiative of mine in the EPP Group – and I thank Mr Bové for his work on it – deals with the farm input problem. It is serious, and you have acknowledged that. At the other end we have had the excellent work of my colleague Mrs Patrão Neves on the imbalance of power and the need to look at this.

I am particularly pleased by your words, and I quote you here, that you will ‘reserve the right to legislate’. I think the stakeholders should listen with concern and be prepared to face legislation if there is no cooperation and effective change on this issue.

Commissioner, you mentioned the financial services sector. I think you were right to do that. There is a huge parallel between what has happened in financial services – to the discredit of the European Union – and what is happening in the food supply chain. My interest in this House is in the food supply chain. Food security is fundamental. Are you, as Commissioner, prepared to watch over the destruction of this if we do not take action now?

Let me warn you that, though we have been up early for this debate, there are others in the food chain who have been up much earlier and are taking from the pockets of producers, both their pockets, to cushion their own profits. Some of the practices that are going on you do not even know and we do not fully understand. There is something rotten in this system, and unless politicians have the bottle to call it rotten, there will be no change. Take this debate to the Commission and take action.

Alyn Smith, on behalf of the Verts/ALE Group. – Madam President, I will be no exception in congratulating my colleague José Bové for this very timely and very powerful report. It pulls together a number of the interlocking and mutually reinforcing factors which are impacting on our food supply chain and making the lives of European and global farmers more difficult. Indeed, there are times when the economics of farming are not so much a science as more of a voodoo cult. It is amazing that anybody is actually in farming at all and that we have any food to eat.

The fact is that the increased concentration of market power downstream of farming, in processing industries, trade companies and supermarkets, and upstream of farming, in terms of increasing costs for fertilisers, energy, feed, seed, water, loans and land rent, is undermining the proper functioning of the food supply chain in Europe. Farmers are facing a squeeze between rising costs for input and low farm-gate prices.

For those colleagues – usually those not present in these debates – who have suggested that the free market is working, I have some statistics from the Scottish Agricultural College report on power in agriculture – actual statistics on market concentration – showing that four companies worldwide account for 75-90%, by some measures, of global grain trade, seven companies control all fertiliser supply, five companies share 68% of the global agrochemical market, and three companies control almost 50% of the proprietary seeds market. If you add to that the supermarkets’ and processors’ power, it really is surprising that our farmers are in business at all. So to those who would say that the free market in agriculture is working – well, prima facie, no it is not.

We saw what happened – as other colleagues have mentioned – with the breakdown of the interbank lending market earlier in this economic crisis. It is the poorest who are hit hardest, and our citizens are very much in the frame for this. So I was delighted, Commissioner, to hear your fulsome presentation this morning, and I hope you will gather from this debate that this House is looking for more action from the Commission, not less. We are your ally in this and, if anything, we want to see more urgent activity from the Commission on the many issues raised in this report.

We want to see further action because this is not going to go away or get better. Quite the reverse – the market is concentrating further day by day in a world where we are increasingly seeing instability in energy prices, global instability and its political knock-on effects, and climate change making parts of the world wetter, parts of the world drier, and all of the world more climatically unstable. We are not going to see our food supply chain getting calmer.

We need to act on this urgently. CAP reform has never been more urgent and this report deserves to be absolutely fundamental in all our minds as we take forward the CAP reform project with you Commissioner. We look forward to that effort.

John Stuart Agnew, on behalf of the EFD Group. – Madam President, during my farming lifetime I have seen wheat yields triple, and during my farming lifetime I have seen sugar beet yields triple. In addition to that, those sugar beet have gone from being randomly monogerm to consistently monogerm, and all that is down to the efforts of plant breeders. They have to be rewarded for the work that they do. They are in great competition with other plant breeders and the farmer, I can assure you, is the most brutal customer of the lot. If he does not like a variety he will drop it like a stone. The price of failure for a plant breeder is very high indeed: it is 10 years’ work straight down the drain.

Somebody was talking about maintaining seed banks. I can assure you that the seed breeders themselves do that. Actually, seed is one of the farm inputs that farmers have a huge degree of control over, and in the UK a farmer has three choices. He can either maintain an old variety on which no royalty is payable, or he can multiply up a new variety. He will then have to declare that he has done so and pay a modest acreage royalty. He can expect to be inspected, or he can simply buy a bag of seed where the royalty is part of the price. All of these things he can do. This works well in the UK. I do not see the necessity to call on the Commission to interfere in this in any way at all.

(The speaker agreed to take a blue-card question under Rule 149(8))

Alyn Smith (Verts/ALE), Blue-card question. – Madam President, I am grateful to the Member for giving way. You will be well aware that Burns Night is coming up, so I will be wearing a kilt in Brussels for three nights next week as we celebrate our national poet, but that is not actually the reason I am rising to speak.

I pay tribute, Mr Agnew, to your personal interest and activity in the Committee on Agriculture and Rural Development, where you are an active and engaged Member, but I hope you agree with us that, surely, the way to deal with the problems you have raised, the problems that are raised in this report and the problems that colleagues have raised, is by all of us working together within our family of nations and our single market to make sure that we maximise the benefits for our consumers of the single market, to the benefit of our producers.

I would be curious to hear your response to that, given your party’s position of isolationism within the world market.

John Stuart Agnew (EFD), Blue-card answer. – For a start we are not isolationist; we are just the opposite. We want to trade with the whole world and not just be bogged down with the EU. I did not raise any problems; I said that this is something working satisfactorily so do not interfere with it.

I will give you an example of the market. I am an egg producer – free-range eggs. They were in surplus in 2011 – no subsidy on that. I accepted the discipline of my packer and I reduced my production to squeeze out the surplus. Because I did that and made the sacrifice, it worked and the packer then gave me cash compensation. That is the free market working, but farmers must accept discipline. It is no good running to the taxpayer the whole time.

Diane Dodds (NI). - Madam President, firstly may I thank the rapporteur for his work on this issue and the focus that he brings to a wide variety of problems that farmers are facing today. Whilst the rapporteur highlights generally the problems in terms of cost of production versus farmgate prices, in Northern Ireland – despite these difficulties – agriculture continues to contribute to the economy. We have heard colleagues say today that this really is quite a miracle, given the problems that farmers face.

However, the agri-food sector in Northern Ireland has grown significantly, accounts for 20% of sales from the manufacturing industry and now, in a very small region, provides 50 000 direct jobs. We should recognise the absolute importance of this industry to our economy. It is an industry which has proved resilient in difficult economic conditions and should provide further private-sector growth if given the proper support and freedom from oppressive legislation. There is no doubt that many of the issues raised by the report are valuable, but I believe that the greatest contribution that we can make to a sustainable and competitive sector is in producing a common agricultural policy that sees food production and European food security as its aim and objective.

Over recent weeks I have been talking to farmers in my own constituency and they see the proposals from the Commission as complex, overbearing in terms of environmental objectives and favouring landowners over active food-producing farmers. In our discussions on CAP reform, if we miss the opportunity to provide an environment for increased productivity and one which provides food and supply security, we will only continue to increase price volatility for farmers and consumers.

Also, Commissioner, I was interested in your brief run-down on some of the common agricultural policy proposals. You mentioned specifically crop rotation as has been envisaged in the Pillar One proposal. In Northern Ireland this is seen as much too prescriptive and almost certainly will put small mixed farms out of work. It is simply not workable.

In my own country, can I urge the UK Government to get on with its plans for the supermarket ombudsman and to give that ombudsman a range of powers which will actually tackle the issue.

George Lyon (ALDE). - Madam President, this is a very timely debate, and I would add my congratulations to José Bové for a well balanced report that highlights the real problems that farmers face because, as other speakers have pointed out, on the one hand farmers are selling their produce to a handful of very powerful multinational retailers, and on the other hand they are purchasing their inputs from a handful of very powerful agrochemical or agro-industry multinational suppliers. The result, of course, is that farmers are squeezed from both sides by these huge and powerful companies.

This highlights the urgent need for action in the CAP reform and in other areas where the Commission is taking action to try and help this matter. We need to strengthen the hand of farmers when it comes to negotiating (a) with the retailers, and (b) with their input suppliers. If we can achieve that, what will then happen is a better return for farmers, a better margin, and less reliance on the need for taxpayers’ support in the future.

There is one particular area that I think needs immediate action from the Commission, and that is in regard to the fertiliser market. If I could give you the example, Commissioner, of the UK fertiliser market, there is a monopoly manufacturer for nitrogen fertiliser called GrowHow. It is 50% owned by its largest competitor Yara, which is the largest fertiliser manufacturer in the world. The other half of GrowHow is owned by CF Industries, which is the largest manufacturer of nitrogen-based fertilisers in North America. Surely this level of consolidation means there is little real competition in the UK marketplace. I suspect this is replicated throughout the rest of Europe. The only competition they face is from the blenders, but they unfortunately have to buy their nitrogen from that same supplier.

So between 2003 and 2009, output prices for agricultural products increased by 35%, their inputs increased by 42%, but fertiliser increased by 173%. That is evidence that the market is failing. Commissioner, could you give me a guarantee that you will investigate this matter and ask the Competition Commissioner to look closely at how the fertiliser market is operating in the EU?

Richard Ashworth (ECR). - Madam President, Commissioner, our farmers are being squeezed between ever-rising input prices on the one hand, and very tough competitive market conditions for agricultural commodities on the other. Faced with this problem the Commission has two options. They should be reluctant to regulate markets – that is usually heavy-handed and rarely effective – but they should offer encouragement and support to the industry by indicating best practice on all sides.

There are three things you can do here, Commissioner. Firstly you should encourage farmers to cooperate with one another: by working together they can exploit their strengths to buy inputs better, process production better and thereby add value. You can empower farmers by ensuring that there is transparent market information always available; and you can enable farmers by amending competition law, promoting codes of conduct, illustrating best practice and simplifying the common agricultural policy.

I am disappointed that the Commissioner’s proposals for CAP reform fail to recognise adequately the strategic importance of a viable, competitive agricultural sector. How fortunate the Commissioner is that he has José Bové here today to offer him sound practical advice. It is a good report, José. Thank you.

Liam Aylward (ALDE). - Madam President, it is one of the great misconceptions of agriculture that higher food prices automatically translate into higher farm incomes. However, it is the experience of farmers in my own Member State, Ireland, that they are not getting fair play or a fair return in the food supply chain.

In 2010, average farm incomes in Ireland were EUR 17 700, or just over 50% of the average industrial wage. Since 2000 the cost of on-farm production has increased by over 37%, despite major efficiencies at farm level. At the same time the price paid to farmers has increased by only 14%. I have no doubt that this imbalance is replicated for farmers right across the EU.

It is clear that primary producers are being squeezed from both sides of the food supply chain. On the one side they receive low-grade farm gate prices due to the strong position of processors and retailers, and on the other side they pay high input prices due to increased concentration of input companies. Total input costs for EU farmers rose by almost 40% between 2000 and 2010 and costs continue to increase for farmers year on year. The upper pressure on these prices will rise further as a result of resource scarcity and a growing demand for food. On the other side of the chain, retailers have used their powers over farmers to implement a number of methods such as ‘hello money’, ‘pay to play money’, payment delays, shelf space pricing and carrying the costs of discount campaigns, which cut away at the returns of farmers and buy their produce in unfair and unbalanced conditions.

This is about fair return for fair work, making a viable living from work that brings added value to the environment, delivers food security and puts food on the table of the European citizens. The retailers, processors, food suppliers and consumers are key stakeholders in the food supply chain, but so is the farmer. I think we should remember that.

Kay Swinburne (ECR). - Madam President, the rising cost of food is of great concern, particularly at this time of economic hardship.

From an economic and monetary affairs perspective, we will deal in detail with the issue of commodity derivatives, and agricultural markets in general, in the regulation on markets in financial instruments and the Market Abuse Regulation over the course of this year. We need, however, to ensure that our financial services legislation is joined up with our wider agricultural policies. The key will be transparency. Ultimately we do not know what role financial market participants are playing in the world’s commodity markets because there is a lack of transparency in the trading process.

This report makes clear just how many factors influence the price of food, yet it is easy for politicians directly to blame banks and hedge funds for price volatility. This is not a two-dimensional discussion, and the Commission needs to look for more sophisticated tools to remove the opacity in commodity markets and give financial regulators a full toolbox. They really need to clamp down on any abusive behaviour as and when it may occur.

Nevertheless, we need to proceed with caution, as food producers need to be able to continue to use agricultural commodity derivatives to hedge their business exposures. Financial participants should, however, reduce – not cause – volatility in our prices.

Struan Stevenson (ECR). - Madam President, I want to focus on the energy aspects of Mr Bové’s excellent report because improving energy efficiency on our farms is an absolute imperative. I would caution, however, against the race for erecting massive wind turbines on farms. In Scotland right now the modern equivalent of snake oil salesmen are knocking on doors throughout the countryside trying to persuade hard-pressed farmers to part with vast sums of cash in exchange for having one of these industrial monsters erected on their land with the promise of pots of gold.

However, as the recent storms have demonstrated, these turbines are often subject to catastrophic failure, and even when they are working, they only produce a trickle of electricity. As a result, many farmers in Scotland have found that they have rusting hulks on their land which are earning nothing and costing them a fortune. Instead of having signs on farm gates that say ‘Beware of the bull’, farmers should have signs on their gates which say ‘Beware of the bullshit’!

Kay Swinburne (ECR) , Blue card question. – Mrs Köstinger, I wonder whether or not you accept that, without financial participants in the agricultural markets, farmers and producers would be unable to hedge their costs and therefore plan their production and their outcomes better. Do you accept that they do have a role and that they are not all pure speculators?

Kay Swinburne (ECR) , Blue-card question. – Mr President, the speaker mentions speculation and the role that this is playing in a negative sense. I would put the opposite argument: that without financial participants there would be no ability to hedge risks and inputs in the agricultural markets. So they do play an important role – and I wonder whether the speaker accepts that.

And to Mr Agnew, who finds this debate so important that he has already left the room, and all his colleagues from the British Conservative Party, who put the interests of the City of London, with its warped financial products, above the producers of their daily bread, I will tell you how the market really works. When a Dutch tomato producer, during the EHEC crisis, is confronted with a price drop of more than 50% – not through any fault of his own, but just as the result of silly remarks made by a German Minister – he is happy that at least he has a contract with a supermarket for a fixed and agreed price. But what happens in reality is that this supermarket – which by the way is German – then returns his tomatoes because it knows that in this crisis it can force the producer to agree to a lower price.

This, Commissioner, is the way the market works at the moment, and if you had done your job, this would not be possible in a European internal market. This House talks about fair trade with third world countries, but fair trade starts at home, with a fair price for European producers. That is your job, Commissioner.

Anna Maria Corazza Bildt (PPE). - Mr President, I share the commitment to a more balanced and fairer relationship in the food supply chain. I am grateful that Commissioner Tajani has laid down so well the policy adopted by this House with the retail market report, and that it is being implemented.

Progress is being made. Stakeholders who did not talk to each other before have agreed on the principle of good conduct. As we speak they are sitting down and talking about implementing measures. That is not enough. We want more and we are putting pressure on them. However, just as the Commission is telling us that the process framed in the High Level Forum for a Better Functioning Food Supply Chain would not work, they are ready to present legislation.

What is the point of this House voting today to ask to propose robust legislation? We are just running the risk of derailing our own process and undermining our own credibility. We are running the risk that the stakeholders whom we are asking to trust each other will say that, since the Parliament does not trust them, how can they be credible? Parliament has decided that the retail round table is the forum where progress will be assessed, based on data and facts. This will happen at the end of this year. Let us not undermine trust.

Phil Prendergast (S&D). - Mr President, unless we take action to curb the increases in farm input prices, we run the risk of making it too expensive for our farmers – especially our smaller farmers – to operate. We cannot afford to price our farmers out of the market. Any such reduction in agricultural holdings would simply increase our dependency on external markets. This would be negative for Europe both in terms of the value of agriculture to the EU and in terms of the quality and safety of the food available to consumers.

The agri-food industry and distribution represent 7% of total employment within the EU, and are worth EUR 1 200 billion per year – more than any other manufacturing sector in the EU. There is the further problem that food produced in third countries may not be of the same quality, and may not adhere to the same standards and rigorous health and safety provisions, as food which is produced within the EU. Given the importance of the agri-food industry to Europe, it is therefore vital that we protect farmers and thoroughly examine the issue of increasing farm output prices.

Andrew Henry William Brons (NI). - Mr President, if European farmers are to be competitive, even in their home markets, they must cut the cost of their inputs. Mr Bové was quite right to encourage farmers to cultivate their own seeds rather than relying on seed monopolies, and also to recycle phosphates and nitrogen rather than relying on evermore expensive purchases, and of course to return to the production of traditional products. He has also shown himself to be aware of the burden of the cost of complying with legislation – much of it of course EU legislation. He might have mentioned the costs of the new enriched poultry cages that have to be borne by countries complying with this very welcome legislation but not, of course, by those countries that have studiously ignored it.

The gap between farm-gate prices and the prices paid by consumers has been mentioned by other speakers. The power of oligopsonist supermarkets must be broken. They treat farmers as though they were medieval serfs put on earth to serve big business retailers.

Seán Kelly (PPE). - Mr President, I think everything that needs to be said has been said and said well by colleagues from across the floor here this morning. The stark reality is that inputs have risen by at least 40% and farm-gate prices by probably at the very most 25%. This is not sustainable and it needs urgent action. Hopefully it will come.

Certainly the monopolies have to be tackled. Mr Smith and others have outlined instances of extraordinary monopolies that definitely must be tackled. Secondly there are opportunities with energy efficiency and other measures whereby farmers can help themselves, but as Mr Stevenson pointed out they have to be practical and not by people who are selling products that will not make much difference in the long term.

Finally there are the multiples: these really have to be tackled at the earliest possible opportunity.

Jim Higgins (PPE), in writing. – The widening gap between input and production costs and farm-gate prices is not economically viable; for the younger generation farming is not a viable option. Only 7 % of Irish farmers are under 35 years old. We now have a world population of 7 billion; by 2027 it is projected that the world population will reach 8 billion and by 2046, 9 billion! This means that a decreasing numbers of farmers will have to double food production, while also battling climate change and maintaining food standards. The total input costs for EU farmers climbed by 40 % between 2000 and 2010, while farm-gate prices have increased by only 25 %. Farmers are living on their overdrafts or savings and that cannot continue. We need to ensure that farming is a real career choice for our young people.